CPI data for the UK is a hot data on the radar screen because BOE, Carney is watching CPI, GDP, employment, housing prices, etc in his decision to raise interest rates next year.
At 4:25pm, I decided to put my straddle trade on the GBPUSD as follows: –
GBPUSD – 1.5300 – 1.5325 – 1.5350
Spot rate was 1.5325.
I squared the trade at 1.5245 for a trading profit of 55bps. Not bad for half an hour’s work.
On October 9th, there wasn’t any noise about industrial production in the Euro area.
So to prove a point that ‘noise’ in the media creates volatility, I decided to place a EUR straddle trade as follows: –
EURUSD – 1.1255 – 1.1285 – 1.1315
As it turned out industrial production numbers came out weaker but guess what, no one really cared.
The EURUSD hardly moved, so I withdrew the order.
The point I am making is that once we know where the economy if going then we need to follow the data that supports where the economy is going. Couple with noise in the media nearing the release of the relevant data, then, the currency will potentially be volatile when the data is out. Sounds reasonable? Of course.
I am born in the Year of the Tiger.
The Panthenon Investment Group 